Dropsy is an old medical term that was once used to describe swelling due to accumulation of fluids in the tissues or body cavities, such as the abdomen. Fish suffering from Dropsy often have a hugely swollen belly, hence the origination of the disease name.
The disease is actually an infection caused by bacteria that are commonly present in all aquariums.

Consequently, virtually any species of fish can be stricken with Dropsy. However, healthy fish rarely fall prey to the disease. Fish are only susceptible when their immune system has been compromised by some stress factor. If all the fish in the tank are under stress, itís quite common for the entire tank to become infected. It is also possible for only one or two fish to fall ill, especially when prompt action is taken to prevent spread of the disease.

As the infection progresses, skin lesions may appear, the belly fills with fluids and becomes swollen, internal organs are damaged, and ultimately the fish will die. Even with prompt treatment, the mortality rate is high. Only fish that are diagnosed in the early stages of the infection are likely to respond to treatment.

Symptoms

Symptoms vary widely. Some fish present with the classic swollen belly, others display skin lesions, while still others show few symptoms at all.

This variability is what makes diagnosis difficult. However, in most cases, a number of symptoms are observed, both physical and behavioral. Those include:

Grossly swollen belly

Scales stand out (pinecone appearance)

Eyes bulge

Gills become pale

Anus becomes red and swollen

Feces pale and stringy

Ulcers form on the body along the lateral line

Spine may become curved

Fish clamps fins

Fish becomes lethargic

Fish stops eating

Fish hangs near the surface

These symptoms are the result of the progression of the infection. Internal organs are affected, most notably the liver and kidneys. Anemia occurs, causing the gills to lose their normal red color. As the abdomen fills with fluid organs are pushed aside, sometimes causing the spine to curve. Scales protrude from the body, giving the appearance of a pine cone. This symptom is a classic indication of a severe infection.

Cause

The bacterial agent that causes Dropsy is one of several gram negative bacteria commonly present in aquarium habitats. The underlying cause of fish becoming infected in the first place is a compromised immune system that leaves the fish susceptible to infection. This can happen as the result of stress from a number of factors, such as the following:

Poor water quality

Ammonia or nitrite spikes

Large drop in water temperature

Stress from transportation

Improper nutrition

Aggressive tankmates

Other diseases

Generally a single or short-term exposure to stress will not compromise the ability of the fish to fight infection. In most cases of lowered immunity, the stress exposure has happened for an extended period of time, or several stress factors have occurred in rapid succession.

Treatment

Dropsy is not easily cured. Some recommend that all affected fish be euthanized to prevent spread of the infection to healthy fish. However, if detected early it is possible to save affected fish. Treatment is geared towards correcting the underlying problem and providing supportive care to the sick fish.

Move sick fish to a hospital tank

Add salt to hospital tank, 1 tsp per gallon

Feed fresh high-quality foods

Treat with antibiotics

It is important to move the infected fish to another tank to separate them from the healthy fish. Meanwhile, perform a water change on the original tank and monitor the fish closely for appearance of symptoms. Salt should be added to the hospital tank, at the ratio of one teaspoon per gallon of water. Keep the tank scrupulously clean, and perform weekly partial water changes. Provide a variety of fresh, high-quality food. Often this is enough to resolve the infection in cases that are not advanced. Keep the fish under observation for several weeks after symptoms disappear.
Antibiotics should be used if fish do not immediately respond. A broad spectrum anti-biotic specifically formulated for gram negative bacteria is recommended. My preference is for Maracyn-Two. A ten day course is ideal for ensuring the infection is eradicated. However, you should always follow manufacturers directions for duration and dosage.

Prevention

As in many diseases, prevention is the best cure. Almost all the factors that stress fish enough to cause them to be susceptible to infection can be prevented. Because poor water quality is the most common root cause of stress, tank maintenance is critical. Other factors to keep in mind include:

Perform regular water changes

Keep the tank clean

Clean the filter regularly

Avoid overcrowding the tank

Do not overfeed

Use flake foods within one month of opening

Vary the diet

If the tank is well maintained, and the fish fed a healthy diet, outbreaks of Dropsy are unlikely.

I'm curious about whether or not the fish was sick or pregnant. Guppies are live bearers, meaning they give birth to actual whole baby fish instead of just laying eggs, so their bellies tend to get bigger than egg-laying fish.